Understanding the Risk of Futures Exchange: Evidence from SHFE

Xuyi Wang, Wenting Shi


Based on the descriptive analysis of China futures trading mechanism and the structure of China futures exchange, this paper defines the risk of futures exchange as uncertainties in the futures market that cause the futures exchange to suffer loss due to the default of its members. Several risk factors such as price fluctuations, market monopoly, capital sufficiency and market manipulation can be identified when the development of China futures market is more closely observed. By setting up a risk-warning model for China futures exchange through multivariate analysis using data from SHFE, an empirical study indicates that as the most important risk factor the price fluctuation has a great influence on China futures exchange. The effectiveness of the risk-warning model is supported by the analysis results from the latest data.

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DOI: http://dx.doi.org/10.5539/ass.v4n10p30

Asian Social Science   ISSN 1911-2017 (Print)   ISSN 1911-2025 (Online)

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